Question

produces a single product. for the most recent year, the company's net operating income computed by the absorption costing method was $17,350. the beginning inventory must have been: g

Answer 1

Hi, your question is incomplete, i tried to look for it online but i could not find it.

However, here below are some explanations on how to solve the problem question.

We can find the beginning inventory by reconciling the operating income computed by the absorption costing to the operating income computed by the variable costing.

The format of the Reconciliation is :

Absorption costing operating income

Add Fixed Manufacturing Costs in Opening Stock

Less Fixed Manufacturing Costs in Closing Stock

= Variable costing operating income

So the difference between operating income computed by the absorption costing and the operating income computed by the variable costing shows the change in inventory during the period.

Change in unit terms will be : Total Inventory Cost ÷ Unit Fixed Manufacturing Costs.

Now, possible scenarios with your question

IF ENDING INVENTORY IS AVAILABLE

We can add or subtract this change in units to the closing Inventory units to arrive to the beginning inventory units.

IF ENDING INVENTORY IS NOT AVAILABLE

The change in inventory units will be our only inventory during the period and this will also be the beginning inventory units.